Bernstein Liebhard LLP Announces That A Class Action Has Been Filed Against Zafgen, Inc.
October 22, 2015
Bernstein Liebhard LLP today announced that a securities class action has been filed in the United States District Court for the District of Massachusetts on behalf of a class (the “Class”) consisting of all persons or entities who purchased the common stock of Zafgen, Inc. (“Zafgen” or the “Company”) (NASDAQ: ZFGN) between January 12, 2015 and October 16, 2015, inclusive (the “Class Period”).
The lawsuit alleges that Defendants made misleading misrepresentations about thrombotic adverse events in previous clinical trials of its anti-obesity drug, and leading drug candidate, beloranib. Until October 16, 2015, Zafgen had disclosed only two thrombotic adverse events in one prior clinical trial.
During most of the Class Period, Zafgen stock traded in the mid to high $30-range while Defendants trumpeted the beloranib drug trials. But in early October, Zafgen stock suddenly began to fall. Between the opening of trading on October 12, 2015 and the close of trading on October 13, 2015, Zafgen shares dropped from $34.76 per share to $15.75 per share – a drop of approximately 55%. This drop was fueled by rumors in the marketplace that a patient had died in an ongoing Phase 3 clinical trial of beloranib.
On October 14, 2015, Zafgen confirmed that a patient in its Phase 3 trial of beloranib had, indeed, died. Zafgen failed to disclose, however, that the patient was receiving beloranib – not a placebo – and failed to disclose anything about thrombotic events in prior clinical trials.
Late in the day on October 15, 2015, the Food and Drug Administration informed Zafgen that beloranib had been placed on partial clinical hold. This forced Zafgen to reveal on October 16, 2015 that: (i) the patient who died was receiving beloranib – not a placebo; and (ii) there had been four thrombotic adverse events in prior clinical studies of beloranib – two more than previously reported – as well as two additional, previously undisclosed thrombotic events in ongoing studies, for a total of six thrombotic events out of 400 patients receiving beloranib compared to zero thrombotic events in the approximately 150 patients treated with a placebo. The Company’s stock plummeted on this news. After closing at $21.02 per share on October 15, 2015, Zafgen stock closed at only $10.36 per share on October 16, 2015 – a drop of over 50%.
Finally, in September 2015 – the month before Defendants allegedly revealed the truth – Zafgen insiders unloaded over $10 million of their holdings.
Plaintiffs seek to recover damages on behalf of all Class members who invested in Zafgen common stock during the Class Period. If you invested in Zafgen common stock as described above, and lost money on the transactions, you may wish to join in this action to serve as lead plaintiff. In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than December 21, 2015.
A “lead plaintiff” is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Bernstein Liebhard LLP, or other counsel of your choice, to serve as your counsel in this action.
Bernstein Liebhard LLP has pursued hundreds of securities, consumer and shareholder rights cases and recovered over $3.5 billion for its clients. The National Law Journal has recognized Bernstein Liebhard for twelve consecutive years as one of the top plaintiffs’ firms in the country.
You can obtain a copy of the complaint from the clerk of the court for the United States District Court for the District of Massachusetts.